AI’s endless thirst for power is driving a natural gas boom in Appalachia—and industry stocks are booming along with it

The dynamics have changed now—especially in the heart of the gassy Marcellus Shale in Pennsylvania

Gas demand is beginning to boom thanks to the electricity ing frenzy from data centers, skyrocketing liquefied natural gas (LNG) exports, and the retirements of aging coal plants being replaced by relatively cleaner-burning gas

Meanwhile, crude oil-weighted stocks are almost all down, mired in a longed slump of middling pricing, weaker demand growth, and surging OPEC duction hikes. “With the resource-rich potential in this [Marcellus] basin and the growing demand component for AI and data centers and power, it really is setting us up well to help shape this AI revolution that’s going to take place here in the United States,” Range Resources CEO and President Dennis Degner told Fortune

A decade ago, the gas industry’s fortunes focused on seasonality and how cold each winter would ve, Degner said. “Now we’re talking power and data centers and LNG essentially doubling over the next few years

Those are all big, diverse demand components that really get us excited the durability of our model.” The Appalachian region—primarily the Marcellus and Utica shale plays in Pennsylvania, West Virginia, and Ohio—duces just over one-third of the nation’s gas—and very little oil—with ximity to Virginia’s growing Data Center Alley and, now, more AI infrastructure expected within Appalachia

After a couple of decades during which U.S. power demand remained relatively stagnant, domestic electricity consumption is expected to surge by 25% from 2023 to 2035 and roughly 60% from 2023 to 2050, driven largely by AI and data centers, according to the International Energy Agency. wise, record-high LNG exports will roughly double by 2030

Based on new construction underway or greenlit along the U.S

Gulf Coast, LNG exports are expected to rise from 15 billion cubic feet per day in 2024 to at least 30 billion daily by the end of 2030. “It’s really night and day when you look at the gas names versus the oil names,” said Gabriele Sorbara, energy analyst at Siebert Williams Shank & Co. “The fundamentals for gas are very strong

You’re going to have massive tailwinds.” Appalachia’s boom Antero chairman and CEO Paul Rady said in his earnings statement that the industry now expects natural gas demand to soar 25% by 2030, led by LNG growth and then by data center power thirst

The top gas ducers are all exceeding their duction estimates this year with goals to continue ramping up for at least the next two or three years

But they’re doing it without huge spending hikes because of the operational efficiencies gained through drilling and completing wells

But Range is doing it while only operating two drilling rigs

For comparison, Big Oil giant and leading Permian Basin ducer Exxon Mobil has at least 35 rigs operating in the huge West Texas oil basin. “These [Marcellus] wells are just massive,” Sorbara said

Instead, the question marks focus on the exact extent of demand growth, the timing, and the gas pricing, making gas players relatively conservative when it comes to ramping up duction, building new pipelines, and inking fixed-pricing deals with data center developers

For instance, since mid-June, natural gas prices and stock values have slumped a bit because of milder weather and rising gas storage levels

But that’s not slowing the bullishness

Range sends half of its Pennsylvania gas toward the U.S

Gulf Coast and LNG exports but, because of pipeline constraints, additional growth is almost all coming from regional data center demand

Range, for instance, has a new partnership with Imperial Land industrial park developer in Pennsylvania to fuel new gas-fired power generation for data centers

Pennsylvania’s r City complex will soon become the nation’s largest gas-fired power plant

The massive 1.9 coal plant east of Pittsburgh is being converted to natural gas with up to 4.5 gigawatts of power capacity to serve a sprawling data center campus

The largest Marcellus gas ducer, EQT, recently inked deals to vide gas to r City and to Pennsylvania’s planned Shippingport Power Station, also being converted from coal

And EQT is viding pipelines services to fuel planned gas plants in West Virginia in the heart of coal country. “The cluster effect of these AI data centers and these ecosystems will only continue to build on themselves,” EQT CEO Toby Rice said in his earnings call. “As momentum grows in our operational foot, we think the opportunity could get larger. “One of the reasons why people are selecting this region to build their data centers is because they’re building on top of a lot of gas infrastructure,” he added

There may be a current bottleneck on gas turbines for building power plants, but manufacturing is ramping up and most of the hyperscalers’ jects are a few years from coming online

The nation’s top natural gas ducer is little-known Expand Energy because it was formed just 10 months ago through the combination of Chesapeake Energy and Southwestern Energy

Expand has huge presences in both Appalachia and northern Louisiana’s gassy Haynesville Shale near the LNG hubs. “It’s a pretty exciting time for natural gas,” said Expand CEO Nick Dell’Osso in the second-quarter earnings call. “You have people recognizing the value that gas plays in the economy, the efficiency that gas creates for the growth in power demand, which is all tied to our growing economy fueled by the innovation associated with AI.” The gas players are increasingly confident they’re not going to boom and bust

The Marcellus has ample reserves for decades so long as they don’t overduce. “We can do this for decades to come, and now you’re talking a [data center] demand component that’s coming that’s heavily dependent on reliability, repeatability, and the [gas] inventory,” Range’s Degner told Fortune

Of course, Range thrives on all three, he emphasized

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